Shares of Dick’s Sporting Goods (DKS) fell nearly 20% in premarket trading as the U.S. retailer reported a 23% drop in profits and lowered its earnings guidance for the remainder of the year.
The Pennsylvania-based company cited consumer theft and a slowdown of sales in its outdoor category as the reasons for the poor Q2 financial results.
Dick’s Sporting Goods announced earnings per share (EPS) of $2.82 U.S. versus $3.81 U.S. that had been expected by Wall Street analysts, according to Refinitiv data.
Revenue in the period totaled $3.22 billion U.S. compared to $3.24 billion U.S. that had been forecast. Sales had amounted to $3.11 billion U.S. in the year earlier quarter.
Dick’s also lowered its profit outlook for the remainder of this year, saying it is grappling with “shrink,” an industry term that refers to inventory lost due to theft or internal issues.
The retailer said it now expects earnings of $11.33 U.S. to $12.13 U.S. a share for all of 2023, compared to previously issued guidance of $12.90 U.S. to $13.80 U.S.
Dick’s reaffirmed its comparable store sales forecast of flat to 2% growth for the entire year and isn’t cutting its capital expenditures.
Despite the Q2 profit loss, the company still expects its gross margins to increase for the full year compared to 2022.
Dick’s stressed that its Q2 profits were hurt by a slowdown in its outdoor category, which includes hard goods such as camping equipment. The company is using promotions to offload inventory from that category.
Dick’s also announced that it is cutting 250 corporate jobs, representing less than 1% of its global workforce, to streamline costs.
Prior to today (August 22), the stock of Dick’s Sporting Goods had increased 33% over the last 12 months and was trading at $147.04 U.S. per share.
